tv Closing Bell CNBC September 15, 2015 3:00pm-5:01pm EDT
they are back up. listen, janet yellen obviously incredibly intelligence and powerful, but even the most powerful officials don't necessarily know how traders are going to react f anybody does let me know. melissa, thank you. look forward to that fine show tonight. take care. cow is up 257. "closing bell" starts right now. hi, and welcome to the "closing bell," everybody. i'm kelly evans here at the new york stock exchange. >> i'm bill griff get. i love days like today in the markets. we have so many different moving parts and pieces as you're trying to figure out the message here. the stock markets rallying ahead this have fed decision on thursday, the dow up now 1.6%, we are back out of correction territory by the way, the s&p is up 1.5 almost, nasdaq up 1.25, the russell which has been leading the way lately is up less than 1%. take a look at the wild moves in
the fresh rears, two the year yield now is at .8%, just below that we are at a level we haven't seen since april of 2011. what is that screaming for right now? >> the most interesting thing is this is happening, these yields moving higher even as we are getting this nice rally with the dow up 250 points and counting. coming up richard fisher will join us at the stock exchange to give us his odds for an interest rate hike in a couple of days. >> he is the perfect guy to have on today. tesla getting some high end competition. could porsche's electric concept car really give tesla a run for its money? we've got the video, the super cool looking car and both sides of that story coming up. and mark zuckerberg fielding questions right now at a facebook town ham. we will bring you the late fres that event throughout the hour and you can choose to like or dislike. >> yes, you may do that now. you will have a choice. isn't that interesting? let's get right to bob pisani who has been tracking
this action all day. what interesting action we're having, bob. >> it is government things going on, first the day before the fed meeting and historically that is an up day for the markets, it's very well documented, the fed did a paper on this a number of years ago. we're seeing that exactly on queue. volumes on the modern side and many of the big cap names all up 2%. merck, pharma stocks, here is procter & gamble, up 12.5%. 7 million shares, a lot of the big global industrial names, 3 m trading here almost up 2.1%, volume on the moderate side. a lot of the other action stood in interest rate sensitive groups, you were mentioning those moves, selling bonds and moving into stocks. that's benefitting interest rate names because yields have been moving up here. if you look at the banks here, here is jpmorgan up 2.3% and a
lot of the smaller regional banks like citizens there up almost 3%, synovus up 7.1%. we're also seeing other interest rate sensitive sectors moving up as well. a lot of people speculating will what exactly it means selling bonds and moving into stocks because sometimes you don't see the bond sales, you see the stocks move up prior to the fed but not the bonds selling off and that's got a lot of people speculating about some people moving some positions around and maybe lightning up on those bond positions. why exactly they're doing that. a lot of theories about t but bottom line, great day for the stock market. guys, back to you. >> thank you, bob. >> we are at session highs, up 265 points. >> as the world waits for the fed, remember, it could have more of an impact this decision thursday on countries beyond our shore than on us in particular. news from china and brazil could be moving wall street. michelle caruso cabrera has details on both of those more us now. >> china and brazil two of the
key bricks in there. first let's start with china. there's so much concern about whether china is growing 7%. there's a new study out from the center for strategic studies they have and commissioned two top china researchers to look at what is the state of the chinese gdp. they spent two years trying to answer that question. here is what they found out, that they think that actually the 2013 chinese gdp was understated by the government, the official government figure is 9.5 trillion where as the center for strategic and international studies say they think it's 10.5 trillion, a full trillion more. it turns out china is using an old model, a 1993 model while most of the world has moved to a 2008 model. china promised by 2014, in fact, in december nine months ago they were going to move to that model and revise upward the previous year's gdp's, they never did
that. no explanation and to why not. what they have suggested in the report maybe it's china struggling to hit 7% growth. if you are starting from a smaller base it's a lot easier to hit the change in your growth targets if you can mover from a smaller number. so when we ask about whether or not they are actually growing enough, it gives you some insight as to whether or not they can actually meet the numbers and whether or not they actually fudged the numbers in some ways in order to achieve had a what they need. let's move on to brazil which is facing austerity situations just like we talked about in europe. they have announce ds a new round of austerity measures, the finance minister went on television last night, it's $17 billion worth. they've got to do this because they've got a big budget deficit, they were downgraded to junk by standard and poor's and as a result they have to respond. what did the markets do today? the braz long stock market responded fairly positive to this, when it comes to brazil's
ten year yield it hasn't moved very much it's still around a whopping 15% though it's lower than it was just a few days ago. back to you. >> wow. >> wow. >> jinx. michelle, thank you. >> two big stories and two big economies there, too. >> joining our cloeging bell exchange, rob frost from frost and frost wealth management, we have jonathan corpina from meridian equities. and rick santelli. that two year note is what has gotten everybody's attention, .8%. is that the market trying to figure out what the fed is going to do on thursday? are they forecasting a rate increase? >> no, i think it's anxiety showing up on the trading sheets. i think as we get closer and closer to thursday more decision right side being made in an emotional underpinning and i think this is the type of volatility you see when you add that emotion into an already
thin trading environment. i know that the volume isn't super light but i know it's not super heavy in stocks and it's not super heavy in treasuries. takes a lot more volume horsepower -- excuse me, it doesn't take a lot of volume horsepower to move the markets and that explains part of the distance traveled for the two year or three year or even 305 on a 30-year bond. i think it's pretty simple. we are now at a point where many traders are thinking about the fed in the following fashion, no way janet yellen and stan fisher would sit by for the past week and watch the markets and not voice any type of push back if they weren't going to deliver some form of normalization on thursday. and i will stick with that. >> rick, they are in a quiet period. >> do you know what, they are in a quiet period, i understand that, but the dynamics of what's going on now, there is a lot of channels to get the word out. this is some pretty big -- big
issues we're dealing with and i think quiet period aside if this wasn't right there would be voices, dsh. >> stories in the wall street journal. >> you still have two more editions of the wall street journal to go before the announcement on thursday so there's plenty of time. >> of exactly. >> >> let's move on. >> so i think it happens. it's going to keep going. >> okay. >> this is what happens when you normalize, period. >> jonathan, what's this stock rally about, then? if there are those who feel that the fed is going to move on thursday is that what the stock market is forecasting as well with this rally? >> i don't think we can tie that directly to that right now. i think the market is very confused as to what is going to happen on thursday and investors feel the same way and that translates into these volatile markets that we continue to see. easily we can be down 150 tomorrow. we are in uncharted territory here, we don't know what the fed is going to do. if you go back to june and look at so comments that came out of washington, we would have thought something would have happened much sooner and the
world has clearly changed since june. so the market right now is going to continue to trade in this wide range until we get more information on thursday, but at this point right now until more articles come out or any leaking of information as rick might allude to, we're not going to really have a good feeling as to where this market is going to move and how it's going to react on thursday. >>. jump in the viks, was that price nothing a lot of the fed moving here? is that why maybe we already have been through that periods of difficulty that's why we're sailing more smoothly here today? what do you think? >> i think a few weeks ago there was more concentration on what the fed would do because economic data seemed a little weaker or seemed a little stronger than it is right now, so with a little bit weaker data people are starting to bet that the fed won't raise rates. >> but then why is the two year popping? >> how often earth anybody conditioning that if the feds
raise interest rates 15 or 25 basis points it's going to derail this economy which is clearly headed up i just don't understand. and secondly, i think anybody that bets that the fed won't raise interesting rates and is surprised on thursday is going to be about as surprised as someone in greece was that they couldn't get money out of the atms, they should have expected that a long time earlier. >> jonathan, have you figured out or does anybody guess what a market would do on thursday if the fed does in fact raise rates? >> i haven't seen any of the volatility numbers that would be associated with that and pricing any derivative structures towards that right now. i gist think that investors are very much going to sit on their hands and just wait to see what's going to happen. there is no advantage right now unless you're really certain as to what's going to happen to come into this market. so what happens is that investors will pull back and they will wait, they will get their opportunity once we get headlines coming out on thursday. >> before we go, rick, again, just for viewers who might be confused, i'm confused.
do you think -- we just had rob frost saying this market doesn't think they are going to raise rates f that was true would we still see the two year yield popping the way it is today? >> if this was two weeks ago i would say the two year note movement doesn't mean much, but considering the timing i would be absolutely floored if the fed doesn't do something but the issue is something is a very large room, there is a lot of somethings they could do that would satisfy market participants and keep the equity game alive. that's what equity investors are thinking. maybe they only do an eighth, maybe it's small, the wording about how this fits into the grand scheme of things and there is is where they can thread the needle at least in the short term. >> 12 1/2 basis points that would just be -- oh, my goodness. let's move on. the white house giving new details on why it does not support this bill that would lift the ban, the long time ban, on u.s. oil exports.
eamon javers stepping in with details on that. >> oil markets moved just within the past couple minutes as its white house announce it had opposes this republican bill in the house of representatives to lift that ban which goes back to the 1970s on exporting crude oil from the united states, but we went back and listened to the entire answer the kpraus press secretary josh earnest gave from the white house podium and when you listen to the second part of his answer he throws out a couple of things that he thinks that the oil companies and the republican backers on capitol hill could do. listen to what he said here and then we will talk about on the other side. here is josh earnest. >> end the billions in subsidies that oil and gas companies in the united states already enjoy and actually use that money to ensure the long-term success of our economy and our -- and the energy sector in this country which making important investments in things like wind energy and solar energy. investments that even some of those oil companies themselves
have bragged about making. >> so the white house press secretary there talk being oil kms potentially ending its subsidies that they get from the u.s. government in a variety of different ways and making investments in wind and solar and other renewables. listening to the press secretary there you doggett a sense that this is a hint by the white house of what an ultimate deal to end that embargo -- or that ban on crude oil exports might be here in exchange for ending that ban you can see the white house asking for certain concessions and you just heard the white house press secretary say among those concessions might be ending subsidies and also making some investments in wind and solar and other renewables. so take a listen to what the white house press secretary said you and you start to see maybe the outlines what have could be a deal. whether that would be acceptable on the hill or oil industry is another question. >> let's clarify as well we're looking on our screens talk being a possible pipeline deal. there was no mention, not even an allusion to keystone. is that at all what you're talking about or is that -- what
kind of -- >> doesn't seem to be, no. doesn't seem to be. what he's talking about here in this answer is ending billions in subsidies that oil and gas companies in the united states already enjoy and then using that money, earnest is saying torques ensure the long-term success of our economy. he's saying he wants to see the oil companies spending money on wind and other renewables and r & d in that area and ending those subsidies, then you start to see the terms of a possible trade. did he not talk about a pipeline as part of that -- of that comment. >> but clearly the horse trading has begun. >> it's deal making time in washington, yep. >> thanks very much, eamon. >> you bet. >> we have 45 minutes to go here. the dow is up 264 points, 1.5% gain for both the s&p, the broad index and that dow. the nasdaq hang nothing about 65 point gain. up 1.3. >> mark zuckerberg is host ago town hall from facebook headquarters in silicon valley right now. we will have highlights from the
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the rally continues. moments ago the dow was up more than 270 points, pulled back just briefly there, but still a healthy gain that some people are wondering what's it's all about. up 1.65% on the industrial average right now. a couple of stocks we want to highlight right now that have been moving today, owens illinois among the biggest gainers inside the s&p, bank of america upgrading the worldest largest maker of glass containers to a buy from neutral. and ups is rising after the world's largest package delivery company said it plans to hire up to 95,000 workers for this upcoming holiday season. here we go again. it's about the same number as they hired last year. package handlers, drivers and driver helpers will make up the bulk of those new jobs. porsche, it's taking on tess l.a. the german auto maker vw
unveiling porsche's mission e, an all electric car that accelerates to 62 miles an hour in 3.5 seconds, it can rechange to 80% compass knit 15 minutes, that's half the waiting time required for elon musk's model s. >> will tesla be able to withstand this type of competition? let's bern in james albertine and andrea james. there was a time years ago when if porsche was talk being an electric car that would just be blasphemous, but now how much credence do you give that and what would that do to tess ra louisiana? >> there is a lot of innovation going on in electric vehicles, it's being driven by the government, government regulations but also being driven by tesla's own edge, they are winning a lot of awards, other auto makers want to participate in some of that success. i want to know what the price is going to be and profitability is going to be on those vehicles because we don't have those details yet.
>> james, do you ever any idea? >> i'm going to start saving now because i'm sure it's going to be pretty high. it's funny, i think andrea hit the nail on the head, by the time the porsche mission e comes out we will be talk bgt model 3 tesla at $35,000 to $40,000, we will be talking about autonomous driving features that already are in the works and close to being released to tesla and infrastructure build that tesla is undertake something going to be three years advanced not to mention the giga factory. where is porsche going to get their bats ri cells and how are they going to turn a profit on this vehicle? >> they could buy those batteries from tesla. >> i think tesla -- >> here is a factory coming soon. >> they will be used for tesla vehicles and to the extent that the man holds up for tesla wengs that's going to hold true. >> andrea, are these vanity purchases? if these cars were all the same except they were gas powered would that make a difference in terms of the kind of buyers who
are purchasing them or are they truly making a big difference in terms of their environmental appeal and if they -- you know, if that is the case could they appeal to a broader set of the population? >> it's a great question. what we've found is the typical tesla buyer is that luxury vehicle buyer. tesla competes with porsche right now, tesla competes with audi right now. and they are competing really well, but i do think that the other auto makers are seeing that there are certain advantages to driving electric, if you can harness those advantages you can make a great vehicle and that's what they're trying to do. we'll see if they can do that and if the warranty will be the same, but it will be interesting to see what they come out with, although we have to wait i think four more years to see it. >> let's add apple to this mix as well. we know they have been hiring people away from tesla, tesla has cried foul on that. they hired a former detroit executive to run this division. james, how realistic, what can we expect from apple in terms of a car of some kind? are they going to build a car or
just make the software to own that car? >> it remains unclear, but we believe they are n fact, building a car right now and we would add the google hire yesterday of another key executive to the traditional auto background. we are more concerned quite frankly on the sort of nontraditional competitive front. we think apple and google given their brand persona among consumers if they are able to harness autonomous drive or self driving features, that's going to end up becoming more of a leading edge than what the traditional manufacturers are focused on which happens to be range. the range conversation is three years old, 300 miles, great, but where are you on the variety of features that tesla is bringing to bear. apple and google may actually be closer. >> andrea going back to the bigger question here, are these two porsche and apple threats to tesla, is it the case that maybe porsche if it's electric helps expand that market and maybe it becomes a battery customer and apple is more of a threat or how do you view these two
challengers? >> i think the -- you're going to get morality testify fuel vehicles over time, there will be more electric vehicles. i think tesla has a great seat at the table, all the things mentioned, giga factory, model x coming out this month. so the electric vehicle market will expand, but tesla i think is going to be at the forefront for a long time. charging and giga factory give them first mover advantages in this market. one more thing. manufacturing. apple and google that's the one thing that really remains to be seen is how are they going to incorporate manufacturing? it's one thing to design a car, quite another to build t i think tesla has learned a lot about building vehicles over the last five years. >> maybe we will finally figure out what tim cook has been sitting on all that cash for all these years. it's a highly capital intensive industry that's for sure. thank you both. appreciate your thoughts on this cutting edge industry here. heading to the close we have 37 minutes left in the trading session with the dow up 253
points today and still trying to figure out exactly why. >> even as interest rates are moving a little higher. coming up, former dallas fed president richard fisher speaks with you, he says there will be big problems if the fed does not raise rates this week. when facebook ceo mark zuckerberg talks, the world listens. we will have highlights from his town hall meeting that's going on right now, you're watching cnbc first in business worldwide. forls . . , first in business worldwide. i'm here at the td ameritrade trader offices.
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welcome back. mark zuckerberg is fielding questions at a facebook town hall right now, the company's he quarters in california. >> julia born accident has highway lights for us. >> mark zuckerberg picked off the q and a with his first answer announcing that the company working on a dislike button. saying it's been requested by users for years. >> it may not feel comfortable to like that post, but your friends and people want to be able to express that they understand and that they relate to you, so i do think that it is important to give people more options than just like as a quick way to emote and share what they're feeling on a post. >> he also weighed in on questions about artificial intelligence say he is not concerned about the threat it
could pose but that he's optimistic, for instance, for ai to benefit driverless cars or at facebook for ai to be to do a better job of showing people what they're most interested in or limiting sensitive content. when suppose posed with another question about the need for affordable house nothing menlo park, he says facebook has a responsibility to help out in this area answered and others at facebook are thinking about how to work on affordable housing. zuckerberg also talked about how the future of communication is virtual reality. he says now we are handling a golden age of video and immerse sieve experiences are an exciting time. facebook owns oculus. >> thank you, julia. see you later. time for a cnbc news upgad with sharon epperson. >> here is what we're looking at. russian president vladimir putin
repeating that russia is providing military assistance to sear yachlt he says the influx of refugees to europe would have been bigger without russian support for syrian's government. ups announcing it plans to high 95,000 temporary workers fore the upcoming holiday schblt the full and part-time jobs will help support the anticipated increase in package volume driven by internet sales. work is under way to begin searching the area in poland where a reported nazi gold train may be hidden. they began clearing bushes and trees with according to two treasure hunters the train is hidden. taco bell will begin serving wine, beer, sangria and frozen mix td drinks at a location in chicago next week. marking the first time it will sell alcohol in the united states, this as it tries to increase its appeal to millennials. that's the news update at this hour. what do you think? are you going to go to taco
bell? >> yeah, where should we go tonight? nice romantic evening. let's go to taco bell. >> there's something cheek i willy fun about it. >> i'm going to give the wonky answer. it's more of an example of this brand creep that we're seeing these days. starbucks is going to start doing the same thing, you have had others that are going into that fast casual area there and i think it just dilutes the brand that you already have to try and do what everybody else is doing. >> but on the other hand for busy people they just want to get it all at one place, a quick taco, quick sangria and be on your way. >> there is nothing like a quick an gree a, that's true. >> nobody is drinking soda anymore and you have to get margins somewhere. you can get them from booze. >> that's a good point. >> my favorite part of this whole story, they're hiring a bouncer at a taco bell. >> do you see that at your neighborhood -- you walked up, up amsterdam avenue, does anybody have a bouncer? >> a bouncer at the local
mcdonald's there. 30 minutes to go. the dow up 258 points near session highs at the moment. not the rally alone that we're seeing before the fed meeting but the rally combined with the move upfwhards interest rates. trying to get a signal out of all of this. >> art carbon said this rise in the two year note yield, the word he used jaw dropping. we are back to levels we haven't seen in four and a half years. >> he doesn't think the feds are going to raise rates thursday. a top trading tells us what he is watching in this last and most important half hour of the trading session coming up. >> richard fisher, there he is, he will join us live at the stock exchange momentarily with his thoughts on this week's interest rate decision. stay tuned. hi my name is tom.
what's going on here especially with the move higher in rates? >> this is a little bit wild. we have a strong day in equities but the volume is ex krucruciaty light. >> that's been true this week, last week, too. we thought we would get the volume increase thg time of year. >> we do a triple witch on friday and obviously the fred ond thursday. let's hope this volume is back load this had week. >> was it because we had so much in august? if nothing else we've seen more activity in august than anyone would have expected and much less here. does that mean this rally isn't for real? >> it could mean that, but i think enough people are willing to take a shot when we see drastic movement in prices. >> when you look at the different industries that are participating, are you getting any signals out of that? what are people doing as they maybe move out of treasuries and into what? everything? >> this is broad-based, even utilities are moving with the market which you might not expect on a day when treasuries get hammered.
i'm looking more at treasury market than equities because that movement tells you maybe something done on thursday, maybe small 10 basis points or 15 basis points. >> it's knots shaking up the stock market yet. thank you, sir. >> thank you. >> bill. all right. in case you hadn't heard we are just a couple days away from the big decision or announcement at least on interest rates and wall street news makers have been weighing in. listen. >> they sort of pushed themselves into something where they have to do a little something here, but i would not be terribly aggressive. >> the fed has been responsible. there is harm. they're destroying safers. >> on all the things that the fed is supposed to kafr about, this isn't the time to be moving. >> the big question is not whether they are going to hike or not, the big question is why are we so obsessing about a single hike? >> whatever it is will be according to my knowledge fully in line with what they are
aiming at, which is to be anchor of stability. >> i think the market is more prepared for this increase than many, many traders believe it is. >> the feds decision becomes a bit cribbing yer, that's the one govern on the feds being able to move you can't drive the dollar too high. >> i'm a little bit baffled by the fact that 25 basis point move on the part of the fed is going to have a major effect on economic activity across the globe. >> people are fussing about the fed, this with the fed, that with the fed, who cares? >> we end with who cares? but we add at least one more influential voice to this debate and he used to sit in the meeting when they would make that decision, we welcome back former dallas fed president richard fisher here to the new york stock exchange.
>> thank you. >> we were talking during the commercial break. if you were part of the fomc tomorrow and thursday you would be raising your hand for a rate increase now, right? >> i would have said what alan green span said and tapper said at the end. get it done. >> it's time. >> the real economy is in good shape, we don't have 2% inflation but the trim mean for the dallas fed which stanley fisher quoted is running at 1.6%. we are not deflating because there is a demand shock and the economy is growing and the employment numbers are decent and the retail numbers weren't bad. for the sake of the real economy get rid of this uncertainty and alan nailed it, which is such a big deal is being made out of one move which is not going to set back the real economy. >> so many people say this, get rid of the uncertainty, as if any uncertaintiesy will be done if they raise rates nuns wuns. >> if they don't do it this time we will be having the same conversation before the
october -- >> we will be asking one of these conversations anyway. we remember this from the last time around. the whole thing was what's the inflation rating, are they going to go 50 basis points instead of 25? all it does is bring us to the next piece of debate. >> here is the point, it's a departure point and it reverses the course and starts the exit and it's the beginning of normalization and this is janet yellen's big moment and also its beginning of the definition of her legacy, can we do this and get out of what we started, normalize interest rates, normalize the balance sheet over a long period of time? this is her assignment, this is why god put her in that seat as far as i'm concerned. >> okay. so you would vote to raise rates on thursday? >> yes. >> you want them to. do you think they will? >> i'm taking myself out of this picture now because i'm no longer there. i think it's still a 50/50 decision. i think they will actually for the first time in a long time decide this at the table. >> how passionate is that conversation? take us inside that room, then.
is it a very civilized conversation. >> always. >> where you guys -- come on. >> no it is. >> is there a passionate give and take? >> these are passionate intellectual arguments but this isn't the congress of the united states, we let our children play together, we like each other, we hug each other or pat each other on the back when it's over. this is a matter of trying to do your earnest best hawk or dove to get it right fort sake of the american people. it's a civilized discussion, janet, by the way, is a great chair who mod rates that discussion in the most civilized way as ben bern naingy d as alan d i served under all three of them. these are good intellectual arguments, no one loses their temper with each other. it's a magnificent thing to behold. i think people are being very deliberate here. we are getting to a point where we should be moving, i can't say we anymore, they. it's now october or december. the problem with december, by the way, is you don't give people a chance to window dress
their books and may create additional volatility. >> before the end of the year. >> yes, ma'am. i think we've talked about this a great deal, the real economy is in good shape. as stanley fisher says and i like to quote him because i has the same way -- >> a little different spelling. >> it will still be massively accommodate testify monetary policy here and abroad. >> stanley fisher raised interest rates at the bank of israel all the way above 3%, they have had to revaries course, take them down to 0.1%. how do you know that's not going to happen to us this time around? >> it could but it would give you a bullet to fire. we are out of bullets. q 3 ex opinioned e. pended every bullet in our who will officer. i'm a texan, i like to talk about bullets and who will officers. >> it also is important as to how they execute. do they move and then pause? do they move slowly? nobody i recall would advocate moving very steeply.
>> right. >> so it will be gentle and it will be a slow slope and it may not be consequential meaning month after month in my opinion. >> the two-year note today, jeremy siegel said he thinks the markets are ready. >> the two year note was very interesting to watch today. >> what do you make that have price? >> it could be the unwinding of some trades but to me -- you never know, but it's signaling somewhat of an expectation. it didn't really affect the equity markets. the point was made that the volumes have been low but down side volume has not been high, aert. two the year had a big move, biggest move in a couple of years and it may be -- and i say may, may, may be. >> you're hedging. >> discounting. >> just before we go former wells fargo ceo dig evasavich was on the show friday. he said i don't think inflation is ever getting back above 2%. there's too much global spare capacity. >> there's a lot of global spare
capacity we don't know. again, i think it's running at 1.6 according to the trim mean calculation. what i would expect dick to have said is what every bank sr telling me which is please get them to move because we need net interest margin, whether jp morgan or first national bank -- >> he ran out of fees to raise. >> and the money markets want them, too, as well as companies holding big hoords of cash. there is a lot of interest in this and we will see what happens and i have no idea what's going to happen. >> what do you do thursday? get some popcorn? >> i will be at a board meeting. i will be drinking peppy cola. >> always good to see you. former ptd of the dallas federal reserve bank. heading to the close we have 17 minutes left in the trading session. here still a healthy gain for the dow industrial average up about 250 points. now tobacco may not be good for your health but it could be good for your portfolio, morgan
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awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management. the recent market correction has seen consumer staples underperform the broader s&p. >> but one group has held up
better from the rest from a technical perspective at least and morgan brennan joins to us share this rather surprising portfolio performer right now. >> so it may be bad for a health but tobacco has been good for investment portfolios, take a look at the s&p tobacco industry group. that's up 6% so far this quarter. now, compare that to the s&p which is down 4% and s&p consumer staples sector which is down 1% for the quarter. what's driving this? tobacco companies post strong earnings growth even as smoking popularity declines stateside, they also stopped paying out tobacco poe proe dufrs this year, plus these stocks pay out sizable and steady dividends, they are the reason they are considered a defensible place to park cash. take altria, it pays out a 4% dividend, analysts consensus on fact set, overweight, stock could pop 10% over the next 12
months. a similar story for reynolds american as well, it could rise 9%. reynolds touts a 3% dividend it also recently acquired lauralal. goldman sachs says it's still a buy. another name to consider phillip morris, now, that's the international counterpart of altria. analysts think there's 3% price upsell because plus it has a 5% dividend. maybe not good for your health but tobacco might be good for your portfolio. for began doing the dirty work thank you very much. morgan brennan. >> lighting it up. 12 minutes to go, 245 points higher on the dow. even as we've said interest rates are moving higher, oil creeping a little higher today, s&p up 26, nasdaq 58. the financials have been one of the top performing sectors as well today but we have someone who says that that's becoming a crowded trade. he will explain why when we come back.
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right now, art cashin moments ago told us there is no real imbalance going into the close. buy and sells have pretty much paired off as we head into the final minutes of trading here. joining us for more is eddie perkins. welcome to you. >> happy to be here. >> what parts of this market are you buying and are you surprised we are this resilient ahead of the fed's decision thursday? >> i'm not surprised. i think the market wants the rate increase. we saw a lot of rotation today out of treasuries into equities, i think people are too conservatively positioned, we saw that with the merrill lynch fund manager survey where cash levels with 5.5%. i think people realize they are underinvested and you want to start to buy equities, i think. >> there was a report out last week where one analyst was under -- this is a guy in london -- underweighting u.s. equities because of two things, the maturing business cycle right now and the beginning of normalization by the fed, the punch bowl is starting to move toward the end of the table here. >> i think there's a certain logic to that argument in our
global portfolios we're overweight europe, we also did a vis toit japan last week and came away feeling like there are a lot of good opportunities there. i still think the u.s. economy is in the good shape and favoring more domestic oriented like consumer is something i would continue to do in a domestic u.s. portfolio. >> i want to go back to the point you made about rates as well. people are moving out of the treasuries and into stocks that's your thighs is here, so that's a rotation that supports the fed raising rates? remember, for years now we have seen a risk on/risk off pattern. this would be a real difference. >> i think you have to think counter intuitively. if the fed does not move on thursday that's going to be bad for stocks. we want to see a rate increase, everyone is asking for it, we are ready for t you heard richard fisher's comments, i agree with that. we need to get over it and get it behind us. if there is a rate increase on thursday i think it will be accompanied with a very dovish statement and that will be good for stocks.
>> that's the reason you think financials -- >> financials are very crowd, it's counter intuitive. rates going up are supposed to help bank stocks but everything is always boxed that way. i would lean the other way. you have to think counterintuitively. we are an inflection part in the market. >> eddie, good to see you. >>. we will come back with the closing count down. i have a question for you. since the market hit this short term bottom on august 25th what's been the bers performing market index since that time? the answer when we come back. twitter getting political. the social network can be used to make political donations. we will take a look at what that means for the politicians and twitter. you're watching cnbc. first in business worldwide. it's more than a network and the cloud.
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oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. add new business services with at&t and get up to $500 in total savings. okay. so three minutes left in the trading session here. we are into the count down, people speculating is here with me. this is a recap of what we did today, equities strong, around 10:00 is when it started a and, you know, thn we just kept moving higher here. we are just off the highs of the session for the industrial average. so what caused this? let's look at two of the factors that usually affect the markets, one, oil. wti crude we saw pretty volatile day, in fact, when the white house came out against the lifting the ban on oil exports this was the response you got,
but then it came right back again. up 1.5% on crude oil to 44.68. was that the reason equities rallied? maybe a little bit. here is the other one, though, its two year note with this -- as art cash input it this jaw dropping move to .80%. so maybe those combined gave us the security rally. bes bob pisani, what has been the best performing index in the market since that time? ? what does been its best performing index? >> yes. >> the dow transports if i had to guess. >> good answer, bob pisani. since august 25th it doesn't show it because i think we would need to move the bar one more over, but it's up 9.4% since that time. the nasdaq -- >> that was a recent bottom.
>> august 25th was the recent bottom for the s&p 500 index, but the transports have been the index that have come back again here. >> i think your summary was excellent. the one thing i would add the day before a fed meeting usually the market is up so there is -- >> yes, there is that tendency also. >> that's been well documented. that's one factor. the twist today which you pointed out was the heavy selling in fresh rears that we saw, particularly on the short end, there has been a lot of speculation that the chinese, for example, probably the second biggest holder, third biggest in the world other than the u.s. and japan might have been sellers. the other issue is the whole oil business and you are right, volatility in oil definitely bleeds over into the u.s. market, into the u.s. equities market and that's why i'm a little concerned that we are going to still see some market volatility even after the fed meeting because that's been the one big determinate and that's a proxy oil for global growth and i don't think that's going to go away with the fed meeting, the concerns about global growth. >> thanks, bob.
>> always good to see you. >> we're going out pretty healthy rally on the day before the first two-day meeting of the fed coming up here. the dow up 234 points as we head toward the close. stay tuned. much more on that coming up on the second hour of the "closing bell" with kelly evans and company. i will see you tomorrow. thank you, bill. we will come to the "closing bell," everybody, i'm kelly evans. what a session on wall street, the dow going out with a gain of 230 points, the s&p adding 25, the nasdaq up 54, crude oil did rebound a little bit today, interestingly interest rates were moving higher, especially on the very short end, that area that's really sensitive to what the federal reserve does, we will talk about all of that, whether our last guest was right and that this market wants its fed to raise rates in just a moment. joining today's panel we do have dennis berman from the wall street journal, consumer's steve
lease man and for more on today's market action guy adami. steve, i will start with you because we have had a lot of rhetoric in the last hour about this market. it would be a big deal if this was a stock market that wants the fed to raise rates instead of wanting the fed to continue easy money policies. >> i believe the correct tens is continual future. if i were the market i would want the fed to raise rates to get this over with so i could concentrate on things like earnings and the economy. i think the fed would do well to do so but i don't think it's going to happen. i think they will wait another month. >> i don't think anybody will concentrate on those other things, right? we will move past the first decision and it will be what is going to happen next. >> steve will not be able to sleep even past the meeting on thursday. >> it's 4:00 and i'm having mother cup much coffee. >> if we look at the futures expectations it still is the expectation it's not going to happen on thursday and it's going to move back later into
the year. >> is that true? i know that there have been different discussions about how much we can trust the futures market and what it says, et cetera. i know goldman sachs still december, but at the same time in a move notice two year, it spiked to .08% which is a big move. >> you would like to think that the fed is not taking into account incremental movements in the stock market or short term bond market. it looks at it in sortth sort of in whole but right now i would have to say -- again, i don't know -- >> so, kelly, what's the theory in your question? a bunch of guys -- or girls or women who buy short term bonds decided somewhere what was it 2:00 the fed is going to hike tomorrow or hike on thursday and that they went in and sold two-year notes and bought stocks as the market expressed its pleasure or the idea what it would be happy for the fed to hike. >> what makes it interesting to follow markets and try to figure out what the psyche is, the one
conclusion that people seem to be coming to, people seem to think this is a fed that's going to raise interest rates, do the one hike but give a dovish statement so nobody thinks it's going to be continued hikes that is correct would be a formula for stocks to rally, for people to get what they want but also get reassurance it won't be too much to fast. >> that's the best of both worlds scenario. and let me preface this by saying i clearly didn't see the moves in either the bond market or stock market happening today, but one of the things i said yesterday with you at 4:00 is i said as counterintuitive as this might sound, them hiking rates this thursday will in my opinion be bullish for the stock exchange. you saw some of that manifest itself today. i think everything is in place and we can argue back and forth but i think everything in place for them to raise and to continue that trajectory over the next year and a half two, years. i think that the credibility that the market thinks they have
lost would be regained in my opinion as i think you saw some of that today and i actually think everything that happened today is a somewhat encouraging sign for what might happen this thursday. >> how so, guy? >> because, again, i think if the fed does a quarter of a rate hike on thursday i think they're saying to you, do you know what, everything that we needed to take place is taking place. yes, we understand the market volatility is there, we're looking past t they've used the word transitory before, maybe this volatility in the market will -- will lessen over the next few months. if they don't, this is my opinion, if they don't in my opinion it's tant mount to them blinking and i don't think the market wants to see them blink. >> here is what i disagree with, guy, this idea that somehow we can define what the market thinks from these recent movements. i'm going to place a 60% probability on the idea that the market goes 200 points the other
way tomorrow and that we sit here trying to draw the opposite conclusions of what we drew today. >> and we know there's late volume and other things -- grain of salt. >> the one fact out there is the volatility of the market. the message in the market is undiscernible i think is the right way to put it. >> then we have to get to some of the more bedrock indicators about the economy, strength of the dollar, consumer sentiment, there we're kind of is a shrugging moment, well, it's pretty good but not great. we saw good gdp numbers last quarter. on that level i think we are back at 50/50 toss level. >> today is the seven year anniversary of the collapse of lehman brothers. we have not talked much about it, tells you again how many we have moved on from that period. they are doing a pretty good job collecting some of the funds there to try to make some of the creditors whole, but the market after lehman's bankruptcy went
down 44% to its nadir. when we look today what's happening with the business cycle and financial system does it still seem to you like it's clear scaling? >> you're asking me an interest question that i sort of have an answer to. i would submit that since that, you know, lehman brothers moment they were referred, i think, 30, 35-1ish, other banks in the ballpark. i don't think anything has been solved, i think the problem has been moved. and i know steve will disagree with me on this one, but the leverage in the system has moved from wall street balance sheets to effectively the fed's balance sheet which depending on who you ask a levered probably 65 or 70-16789 some people will say that doesn't matter and maybe it doesn't matter but leverage hasn't gone away image tree clooe, it's been moved from point a to point b and i would also submit that they are
probably the least qualified people to have that type of leverage on a balance sheet. >> dwr wr do you think the leverage s dennis? >> i saw my head nodding when guy was talking about and somewhat disagreeing with your question whether we've past september 15th, 2008 i would say we have not. we still live in the response period from seven years ago. if we think about the end of world war ii, okay, just historical experiment, 1945 that puts you back to 1938 in terms of all the things -- think of all the things that have happened, we are still in that time frame and in that mindset and the debt, i agree, the death has moved to a notch above at the sovereign level and we haven't solved it all. >> there's corporate debt, too. he was saying, look, there is a risk management approach at this point if they wait too long that corporate debt, there are other areas you can point to, will increase and make it much more difficult when they do raise rates. >> i think that concern is something that an mates a good part of the federal reserve
board that wants to raise rates when i hear stan fisher talk i think they look at the argument of stan and other folks is it comes from the other side. some people say you can't raise rates now because of the economic situation, the global overseas situation. another group of people and i think stan is included in that is correct maybe not at this moment, but he certainly was before, was how can you possibly have interest rates at 0, given where the unemployment rate s given what gdp is doing and payroll is doing. i guess i would push a little bit on guy on this notion of leverage on the fed's balance sheet. there isn't leverage on the fed's balance sheet not in a classical sense. >> it's something. i don't know what word you want to use but there's clearly -- >> they have an imbalance -- there is an imbalance there at best. but -- they have a large balance sheet it has to be wound down. it's not bench, though, in the sense that they borrowed money in terms of -- borrowed money to then buy assets above and beyond the principle of the assets. >> fair enough, but it's levered
in terms of what is it sitting upon guys is the point. maybe you know -- i mean, i have no doubt that you know better than me, but it's clearly levered insomuch as it's sitting upon a cash hoard if you were to have any other entity with that similar leverage we would be saying this is unsustainable. >> let me also ask you when we get the statement thursday is it going to be worded differently and are they going to talk about raising the fed fund rate or whether r. there other language, tools, mechanisms to move interest rates higher? >> it is an a/b situation. in the sense if they don't hike you are probably going to get a little more hawkish tone to it, suggesting that the time is near that they are going to hike. if they do hike you will get the opposite, language that's going to say chill out, we will rest on this for a little while. so it depends on which way they go as to how the statement is worded and then i think chair janet yellen is going to choose her words very carefully.
>> just to guess that latter scenario looks like what this market is defining. >> which one, a or b? >> b. >> which was a hike with dovish statement. >> that's the conventional wisdom day, that will probably range in 45 minutes or 24 hours. let's leave it right there. zero in on biotech was up today and hedge fund manager talk being his bet against pharma names. >> kyle bass has formed what he's calling the coalition for affordable drugs it's challenging the patents that protect biotech drugs from generic competition, this is the bread and butter of the biotech industries he has challenged some of the world biggest biotech companies and what he is doing is shorting the stocks of those companies potentially benefitting from those challenges. now, this has caused quite a ruckus in the biotech industry and he explained that strategy there morning in an interview with david faber.
>> there are plenty of pharmaceutical companies that innovate. we are filing challenges on those drugs that allege innovation that just might be a dosing change or that might be a micro tablet delivery system or things that are silly that shouldn't be backed by the u.s. patent office to enable these companies to have market-based mon op lease with the government's backings. if we win we enable generic entry of those -- of drugs in very high priced scenarios, we bring the prices down on average 80 to 90% if a generic is allowed into the market with four or five generics ready to go. >> bass has succeeded in knocking some of the stocks around, but he actually has failed in his first few challenges they weren't accepted by the patent however office, however, saying they are going to continue fighting, they have all the time in the worlgd the way they set this up. the biotech industry has a lot of issues with this, don't expect kyle bass to disappear anytime soon.
>> thank you. guy, dom, what was your reaction to all of this? >> kyle bass is a smart guy and i would hope at least half this is for al troous i can reasons but most of this is probably to try to make money, which is fine. i mean, that's the game? i will say this, though, there are a number of biotech which is an amazing company with a tremendous balance sheet, margins that are unprecedented in the industry that i think still cheap at the current price is trades at. gilead something over the last couple days has been going on with them. the last couple of quarters have been outstanding to say the least and seemingly hidden in all this is that gilead and bristol meyers for whatever reason over the last two or three weeks seemingly are trading in lockstep not to suggest anything that's going to happen or is imminent between the two, but it's worth noting that the last three weeks at least they have been trading eerily similar. >> okay. do you own -- by the way -- >> i do not.
i do not. >> none of these names? >> no. >> dennis, were you going to say -- >> i find it a bit remarkable that kyle bass has this strategy in hand. of course, al truism and making money are all in play there, but the patent reversals -- if you are sitting on a patent word bored and making that judgment and there's a hedge fund guy, i think there's some political pressure or feeling or sentiment in the patent board that maybe we don't want the hedge fund guy however right he may be pushing us around. that's the problem in the stretch. he says he's around for the long-term until at least the short squeeze comes. >> we will leave it there, guy. thank you. appreciate it as always. that's guy add amy. much more coming up on "fast money" at 5:00. they will be talking to a top strategy who thinks the fed cannot raise rates on thursday and you can find out why. up next, why corporate insiders can trade potentially market making news before it's made public. and jeff bezos is taking aim
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$100 million. that's how much corporate execs have hauled in the past six years with what some would call a legal form of insider trading. trading statutes require companies to make ak filings with the sec notifying shareholders of any important events, but the law also allows companies to wait up to four days between the event and the actual filing. that creates an inviting gap in an often spurs internal trades. robert jackson is a professor and director of the mill teen center at columbia law school. he joins us with the panel. robert, welcome to you. i'm amazed actually that this wasn't more commonly known. i mean, how long has this gap existed? >> well, thanks so much for having me. the gap has existed for almost a decade now under sec ruins.
after the enron debacle sarbanes-oxley mandated the. sec for companies to report more quickly. they lobbied and agreed to have a four-day gap. >> how were you tipped off to this? >> well, my colleagues at columbia, while we knew that the gap existed we just assumed that insiders wouldn't trade during t after all, november report both the events and the fact that they traded. when we saw the number of trades and the profits, the insiders were making, that raised real concerns for us and that's dwr we investigated. >> dennis, i don't want to overstate it, but it looks like systematic abuse of the system to the tune of $500 million. >> it's hard to tell the motivations or knowledge much each individual studied in the paper but at least from the shear size of the sample it does seem suggestive that people know. now, the question is whether the
sec is willing to change the duration of that window from four days to two days, perhaps even lower. >> now they've got to? >> come on, chilly, it's the sec they don't move that drinkly. some of the rules to changt disclosure of symptom positions that debate has been going on for years. i don't expect this to happen anytime quickly. maybe professor jackson h ideas on whether that will happen. i would say don't expect anything soon. >> robert. >> dennis is absolutely right first of all, we should be careful to note our data doesn't say who knew what when. what it does do is raise significant concerns. as who to you quickly the sec moves i think we learned from dodd-frank we should not expect anything fast. new york representative carolyn malone has plans to introduce a bill that would mandate that the sec address this problem. >> robert, i have a weird question for you. what was the batting average of the insider purchasers? when they bet -- when they had
the information did they bet the right way 100% of the time? >> no, and that's a really important point. we saw lots of bets, many winners, many losers but they do win more often that be they lose. let me put this this way, the probability that the rate at which they win is random, that is the probability that what i see is just random trading is virtually zero. that's something we test in the paper. now, again, i want to be clear, we haven't shown that any particular executive knew any particular thing but what we have shown is for an sec that prides itself as being a cop on the street the insiders don't seem afraid to trade when there is suspicious trading. >> in general they made a bet and that that bet was in the right direction or the right trade of how the market would receive it. so is it possible to think about this $105 million of profit they made, who paid for that? >> so that's a very good question. i think the answer is public investors. one thing that we see in the data although we don't report it in this version of the study
that when the 8 k is released the stock tends to pop and then what happens is a well-known trend known as reversals, that is the stock price decreases after the pop in a way signaling that those who purchased on the 8 k were buying at a moment when the information was already priced into the stock. we see a lot of reversals in our data. what that suggested was the people who were hurt were the people long the 8 k is brand-new information because the insiders know better. >> that's the most interesting think of all. >> i want people to know what kind of events we're talking b changes to bylaws, deals, key supplier changes, buy backs, stock market listing connotations and interestingly in one of the biggest categories is changes in the accounting firm. does that tell you anything more deeply will what's going on here as well? >> i think that's actually very troubling because we know that changes to the accountants signal lots of things, that's why disclosure of that is required and the idea that people are trading on that is troubling.
my team at columbia and i have put together a website that allows individuals to to take a look at these trades and decide what's going on. >> what's that url? >> i've given it to your producers b j-1.columbia.edu/8 k gap. >> make it more user friendly than that. robert, we appreciate the work. thank you for bringing it to our broader attention. that's robert jackson on 8 ks. >> spend $5 on a url. >> a bit late. >> coming up, why china's slowing economy could be a huge red flag for the high end fashion industry. plus amazon's jeff base so he setting his sites on the stars with his rocket launch business. that's next.
it could've been brenda. isn't it beautiful when things just come together? build a beautiful website with squarespace. it was a rally day for markets ahead of tomorrow's fed meeting. it's a two-day meeting, we get the decision thursday. today the dow up 229 points. now, the space race is heating up after amazon's ceo announced he is making on elon musk, spacex and the rocket launch industry. jane wells has the details. >> it's another privately funded commercial space company setting up shop in the shadow of the old apollo program, this one blue origin created by jeff bay zeros. >> here it is, the new orbitel
vehicle. >> he has announced he will inn ses $200 million for them to build and launch the shepherd space vehicle in florida. up to now most of the work has been done in texas. that's where blue origin tested its shepherd spacecraft last april. this week doesn't carry cargo or go to the space station or deliver amazon packages, instead it will take tourists and maybe researchers straight up past the edge of the atmosphere for a few minutes and then return to earth, all this have completely reusable, blue origin is also working on a new engine which has been chosen to go into the new rocket being built by united launch an alliance owned by boeing and lockheed. >> the assembly near our launch site makes it easier to process and transport really big rockets. >> jeff bezos joins elon musk and sierra nevada is breathing new life into the florida space industry. back to you. our jane wells. thank you, jane.
let's get reaction from eileen collins who was the first female pilot and first female commander of a space shuttle. welcome to you. thanks for calling in. >> welcome. thanks. i'm excited about this announcement. >> why are you? >> well, i am obviously a big proponent of human space flight. we are living at the beginning of an extremely exciting adventure for human exploration. we are going to be exploring our universe beginning with these baby steps of exploring our solar system. so this is a good announcement today, it's not just one company, blue origin, but there's competition out there with specs x and boeing and some others and the competition is good. we are going to be working harder, these companies will be working harder and the other thing, they've got to be safe. you can't have an accident in this business because it will stop you. so i am very optimistic that
although it won't happen fast i'm very optimistic that in the long run this will be a successful venture for all that are trying. >> dennis. >> i'm going to wish them all good luck. >> eileen, where does this leave nasa? you have the private players moving in. what's nasa's role after this really starts taking effect? >> yeah, so nasa has a very strong role. nasa is the leader in our u.s. government is the leader in this effort. we are contracting with companies in many different ways, whether it's the spacecraft or the engine, but nasa is -- also needs to free up low earth orbit. so these companies are going to be flying suborbital and they will be flying orbital missions to the space station as well as tourist flights. this is all below about 300 and 350 miles. that will then free up nasa to do the deep space missions, going back to the moon, going to mars, going to the asteroids. many of these companies aren't
ready yet to go that far and to take that much risk so it's up to nasa to take the risk, do the deep space missions and eventually once the commercial companies are flying safely and routinely into lower orbits then they can follow nasa out to deep space. >> eileen, i wonder if you can help us handicap the space race here. between musk and bezos who has the better technology, who is you think going to be the first to make this happen? >> well, let me say first of all i'm independent i'm not associated with any of these companies, i'm an independent consultant. >> right. >> i would not make that guess right now. i am -- i would have to say i think spacex is a little bit farther along, boeing is also farther along because they are actually being funded at a higher level from nasa. so -- but it's not always the money that predicts who is going to get there first.
>> true. >> 5 to 2 on news snk give me some odds here. i have to place a bet sniem not ready to give odds but i will say that some of these companies in the past 12 months have had accidents and those investigations could slow down the process a little bit. again, we have to do it safe, you can't be rushing. you have to get it right. >> don't forget virgin. >> eileen, thank you so much for calling in. really appreciate your time. >> thanks for your interest. >> and we will interest to follow the story. we have breaking news on a big deal. let's get to dominic chu. >> a story that you will sink your teeth into, dense fly and serona are going to merge in what they are calling a merger of equals to dense fly which is a large dental supply and equipment company will buy ser r r -- sirona that's going to
create a giant in the world of dental supplies, everything from the drills that the dentists use to implants that are put, drowns r crowns, that sort of thing on teeth. again, kelly, a very big deal. the stocks are right now halted for after hours trading, they are slated to reopen at around 4:50 eastern time. we will bring you some updates as soon as those shares start dealing again. a $5.5 billion transaction in the dental supply. dense fly buying sirona. >> we've seen so many antitrust issues in a lot of these mergers, u.s. foods, i can't help but think that that's going to happen with this deal, too. >> we will find a a lot about the dental supply chain. >> do you know who cares, dentists. time for cnbc news up date. >> a float plane with ten people aboard crashed in alaska killing three. it crashed on take off about 175
miles southwest of anchorage. troopers say rescue personnel are taking injured passengers to the clinic in the small community. the state department is urging north korea to refrain from provocations an pyongyang said it's nuclear complex was operational again and working on weapons to use against the u.s. bill cosby citing financial pressures asking a federal judge to dismiss a lawsuit by aig that seeks to avoid paying for his defense against claims by women who accused him of sexual assault. in a court filing cosby's lawyers say he would face substantial prejudice by being forced to defend against aig and the accusing women. president obama welcoming uconn's women's basketball team to celebrate their third college championship in a row. that means this is their third trip to the white house white house. he congratulated them for their accomplishments on and off the court.
back to you. >> sharon, thank you. our sharon epperson. up next, find out what history says will happen to the market if the fed does rate rates come thursday, plus we will hear from a former bank ceo who says a rate hike who actually hurt the financial industry. that contrarian call, it's a great one when we come back. it's more than the cloud. it's security - and flexibility. it's where great ideas and vital data are stored. with centurylink you get advanced technology solutions from a trusted it partner. including cloud and hosting services - all backed by an industry leading broadband network and people committed to helping you grow your business. you get a company that's more than just the sum of it's parts. centurylink. your link to what's next.
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helping to bridge the digital divide. welcome back. it was a pretty strong session today on wall street the dow adding 228 points, the s&p up 25, the nasdaq 54. a lot of folks talking about the financials here ahead of the fed's big decision on thursday. investors are counting down seeing whether the fed is going to raise rates. let's take a look at what history tells us could happen if they do. deidre bosa joins us with some data behind it. >> there are a few short term trades that could prove profitable. which looked at the start of rate hike cycle. 1994, '99, 2004 and the one off raise in march of 1997. from that we found the five best and the five worst plays, one week after that first hike. let's start with what to avoid.
the stocks that have performed worst, waste management has lost ground in every single instance four out of four times and falls an average of 13%. other names that do poorly, starbucks and star wood hotels. as for the best plays five days after the start of rate hike cycle, three of the top three names tech plays, apple the big winner trading higher in three out of those four instances and seeing an average return of 7%. the tech sector as a whole tends to hold up better relatively better at the start of rate hike cycles, one week after the cycle begins all s&p 500 sectors are lower but tech and computer staples see the fewest losses. make sure to check out the cnbc pro for more tips especially if you think it could happen this week. back over to you. despite popular sentiment our next guest thinks raises rates could actually be bad for
some banks. joining us a payton patterson, former ceo of bank well financial group. welcome. >> thanks for having me. >> you're saying everybody is knee jerk, the fed raises rates this is great for banks isn't necessarily the case. why? >> well, i think if the fed does whether it's thursday or not they're saying that they are going to only raise rates between 25 and 50 basis points which i really think is going to have little if any effect in terms of boosting the earnings and as you heard from the second quarter earnings reports the banks are really anticipating the benefit from rising rates, but i think something else may have happened maybe over the last eight or nine years is regardless of how much and over what period of time there's a very different set of competitors out there competing against the banks. >> such as? >> you have the online banks now. >> like ally. >> ally, they have amassed
billions and billions of dollars in deposits and they have been successful in gaining 50 to 75 basis points in a rate differential and consumers have shown they're going to walk with their feet. they like this and they are willing to walk. so i think if the banks don't have aggressive retention strategies it could hurt them and not give them a margin benefit that necessarily that obviously that they are all looking for. >> steve? >> there's annette a if i say of investing that's built on the idea of sticky deposits, the idea that rates go up, banks can raise their lendsing rate quickly but the positives do not move. your theory is based in this idea that deposits are less sticky. is there any evidence to back that up that deposits right now of individual account holders are moving more quickly than they have in the past? >> well, i think if history repeats itself about 70 to 80% of the deposits at banks right
now are in what they call core deposits, they are in checking, money market and savings which are about as liquid as they get. so -- and if consumers are necessarily going to walk for the more competitive rates they've spent nine years wanting to get at least 1%. >> do we know if they have -- >> the point is they already have. it's already happening, ally exists. >> it exists and some depositors have moved over there. i go online and shopped for minority online. i don't necessarily shop for my checking account online and moving my checking account is a much, much bigger deal that i'm much less likely to do for a quarter or half a point. >> i think the real issue is with respect to savings and money markets. those are really the ones that are up for grabs. you have the online banks, you have the money market mutual funds and i think now this could be something that if the banks are not ago testify about retention then they are not going to necessarily -- they are going to have to pay up to keep
those deposits. >> we do have breaking news to get to. there is more in your piece the american banker. thank you for joining us. >> let's get back to headquarters. dominic chu what's happening? >> we have comments coming up from hewlett-packard's financial outlook, they're making these comments, releasing their fiscal 2016 financial outlook as part of it they do say that to achieve cost savings associated with the future hewlett-packard enterprise split from the hewlett-packard printer and computer division that they hope to achieve savings, hewlett-packard enterprise expects between 25 to 30,000 people to leave the company primarily associated with the enterprise services transformation, that's the part of the company that belongs to the hp enterprise part of the business, the business that will be run ultimately by meg whitman when the split actually occurs. some headlines coming about their financial outlook. this could just be attrition but
they are making these comments saying they expect between 25,000 and 30,000 people to leave as part of is this particular transformation with the splits and of course we will get all kinds of clarity tomorrow. you are going to want to for sure, again, pay attention to this because we have big news coming. back over to you. >> dom, thank you. be sure to tune in tomorrow 9:00 a.m. eastern for an inclusive skber view with meg whitman. again, tomorrow morning 9:00 a.m. >> i can't keep track of how many times they have announced layoffs of that scale. the company is literally shrinking before our eyes, it's a bit of a sad length to see hp. they are obviously doing this split but it keeps on coming and coming. >> not only of interest to current employers and investors but as carly fiorina is out on the campaign trail got to think about the impact that headline has for her too. >> the ream of competitors who are trotting over hp space, they are there and eating that i ever lunch. >> much more to come tomorrow morning on hewlett-packard. find out why the fashion industry may be getting worried about china's economy.
plus politicians can raise money on twitter. will we soon see hillary clinton, donald trump and others tweeting for dollars? that's next. lease the 2015 rc 350 for $429 a month for 36 months. see your lexus dealer. ♪a one, a two, a three percent cnext.ack♪ there's gotta be a better way to find the right card. creditcards.com lets you compare hundreds of cards to find the one that's right for you. just search, compare, and apply at creditcards.com.
quick news alert here for you. crude oil prices sunching following an unexpected drop in u.s. crude stocks. there's the quote for you of 2.5%. api saying crude inventories fell 3.1 million barrels in the latest week and that is supporting the price action this afternoon. the world of politics is all
a twitter today truly twitter is teaming up with square to allow users to make campaign donation was a tweet and several candidates are wasting no time. bernie sanders tweeting, we have the momentum, let's keep it going. contribute to our campaign today with a link to cash.me. marco rubio's team tweeting new today with square cash you can support marco rubio with a donation from twitter. also a cash.me url. this all playing in into what mark cuban told us yesterday about the importance of social media to this campaign. >> when we look at a billionaire candidate we think they can afford t they don't need to take money from special interest groups but with the success donald has had in understanding how to use media rather than having to buy media i think we will see other candidates that are businesspeople that understand social media, understand traditional media, but can watch and she what donald has done and realize you don't have to spend $100 million, you don't have to spend $5 hurn million or more like
candidates did in the 2012 election. joining us now for more is joe rosbers, the former chief digital strategist for president obama's two presidential kpanls. i guess you guys didn't need this, but how transformative is it? >> we raised 10% of the $690 million we raised in the last cycle through social media, so this is a first step to make it easier for people to give. what we see in all kinds of political giving is there's a lot of requirements for the fec to take address and employer it's akin to registering to vote. this is one step in lowering the barrier. >> basically people are tweet ago link to cash.me how is that tweeting for dollars? it's just here is a sa link. >> you will still have to enter all your information to be filed in the fec report but the more people do that and get used to giving that's good because we badly need nor smoul donors in
the political process. >> steve wants to get some money for himself. >> i'm tweeting out send me money @steve liesman. >> we know -- this is a social media event this election but what do you think will be the defining fulcrum point for what's going to make it or break it for candidates this time around? we all know it's out there. who is going to do the best? >> i think it's going to be the candidate that really needs it, that needs the grass roots donations and volunteer time to make it happen. a lot of the candidates, especially on the republican side, they are not betting on that big influx of new people donating for the first time or registers to vote for the first time. the candidate is that thank you needs it the most is likely to use it the most. >> is this a pig in a poke? there is massive dollars from billionaires and millionaires out there that are flooding the political system right now. is there any way that individual twitter contributors can really make a difference? >> it's ironic that those dee
nations in federal reserve billionaires and foreign interest can be anonymous from c4,but we're requiring a ton of individuals to make a $5 donation. >> we are not going to dem extra advertise the process. >> if you need to build a grass roots campaign we showed through two elections in with president obama that outweigh the big dollars head to head. >> happening with ben carson as well. we will leave it there for now. joe rosbers from blue star digital. let's get more on this breaking hewlett-packard news with david faber and more details. >> we do have more details to clarify exactly what's going on as it approaches the split of the company into hue let pack around enterprises and the printing and ink business, if you will, and of course personal computers as well. the job cuts are going to be new cuts when it comes to hewlett-packard enterprises
which will enter the world as a public company with 250,000 employees and immediately begin shrinking that by 10 to 15% so 25,000 to 30,000 jobs to be cut in s. what the company is saying the goal to be saving. saving $2.3 billion annually. previously as the split moved along in terms of planning. we were told they are looking at much as a billion dollars be saving and $2 billion at enterprise services and that being said now we have specifics on how they will save that money. to the tube of 25,000 to 30,000 people that are expected to leave the company. there is hiring that is anticipated once those people have left. but they are also moving with what seems to be employees from high cost to lower cost places. but again, a significant reduction in the work force of this company in order to maintain margins at the targets they've set for us. it can become confusing because the company has cut 55,000 jobs
in a separate cost-reduction plan. tomorrow morning meg whitman will be my guest and we'll shed more lights on the decisions saz a result of the split coming on november 2nd for two fortune 50 companies and give us an idea of how they expect to save money at hewlett-packard enterprises which is the company she is leading as ceo. >> thank you for clarifying the main question we had when they saw this news, given the cuts of 50,000 jobs cut in the last three years and these are new. 25,000 to 30,000 and these are in the enterprise piece of the divided company. >> yes. and people can be for given for having not exactly a census of exactly of what was going on given your point that so many job cuts have taken place. this is new. 20,000 to 30,000 and the larger of the two businesses, certainly
employee-wise, as opposed to printing and computers. >> thank you for that reporting. we look forward for much more tomorrow morning. david faber on hewlett-packard suffering more cuts. more "closing bell" right after this. technology empowers us to achieve more. it pushes us to go further. special olympics has almost five million athletes in 170 countries. the microsoft cloud allows us to immediately be able to access information, wherever we are. information for an athlete's medical care, or information to track their personal best. with microsoft cloud, we save millions of man hours, and that's time that we can invest in our athletes and changing the world.
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week kicking off in new york city. designers are worried about how to handle the changing chinese consumers. and courtney reagan is here with this. are they worried about this. >> they are. and the bad news is that retails show that chinese shoppers are scaling back. but the good news is chinese consumers are still buying while traveling outside of the country. so the results today revealed 23% profit drop over all. revenue down 19% and the fashion houses in hong kong failed to show signs of recovery but the prada european revenue grew 5% thanks to sales from tourist. andkerring notices continuing weakness and with what is unsteady but strong growth from
chinese tourists and in japan. and while tiffany saw double-digit sales growth in china, it too saw weak ng in hong kong and mccal stores. and the high end jewelry store said chinese has moved to other markets. the sales in china are okay for con cler and so he considers chinese business strong. a word he used. >> but people could say china, and see them bailed out from other operations what, does this mean for retailers broadly. >> i think they put stock in shoppers going to mccowen and how long. there is a lot of real estate. they have invested too much. it is good that they are still shopping but it is in other areas, not in china. >> this is the real side of the capital flight story.
it is an amazing story. money is streaming out of china and it is still their money and that is why they are buying overseas. >> it is cheaper in europe. we have to leave it there. but steve lees man, dennis bur man. >> we'll see you on the runway. >> "fast money" begins right now. >> live from the nasdaq markets overlooking time square, this is moyle. pete najarian, karen finer, and brian kelly. all of the details of what the new additions could mean for shareholders. and the countdown is on for thursday's fed decision. we'll talk to one well-known wall street strategist that said there is a major reason why the fed will not hike rates this week. and he'll tell us what that is. ? and the story of the day. the short end of the curve that had everyone talkin